This dissertation studies drivers and consequences of firms' policy decisions from a supply chain perspective. Policy decisions can be both internal and external to the firms and carry substantial implications for firms’ performance outcomes. Both internal and external aspects of policy engagement are critical since they help further disciplinary understanding of not only how policy decisions influence the performance of products firms manufacture, but also the fact that firms can reshape their environmental conditions through adopting policy decisions to engage with regulators and impact their own business practices. Specifically, I investigate firms' sourcing policies and their product performance implications – an internal policy set by firms. Within the context of external policy engagement, my research investigates firms' policy responses to external conditions, such as climate change public policies.The first essay focuses on manufacturing localization, an internal policy set by automakers to relocate manufacturing activities closer to their target market. I apply a causal estimation method to 23-year panel data of the automotive industry complied from diverse data sources including Wards, National Highway and Traffic Safety Authority (NHTSA) recall data to investigate the quality implications of manufacturing localization. The results show an immediate quality decline for localized vehicles, indicated by an increase of 68.203% in the number of recalls (equivalent to 0.552 more recall campaigns) and an increase of customer complaints by 56.831% (equivalent to 9.997 more complaints) in the three years after the manufacturing localization. The increased number of recalls can lead to an extra expense of $2.76 million for a localized vehicle based on conservative estimations. A cautionary note is thus issued for automakers to adjust their planned budgets to account for warranty claims before the localization. This study provides guidance for firms considering the relocation of their manufacturing activities and for regulators that seek to reduce vehicle recalls. The second and third essays of my dissertation investigate firms’ engagement in influencing climate change policies (EICCP), which refers to firms’ strategic actions to influence climate change policymaking processes, aiming at reshaping policies or promoting policy changes in favor of their interests. In the second essay, I conceptualize EICCP and propose a taxonomy for EICCP strategies considering firms’ perceptions of external conditions and internal resources. I also create measures for EICCP to empirically validate this taxonomy by performing text analytics with machine-learning techniques on firms’ self-disclosure in CDP Climate Change data. Building on the second essay, I undertake a large-scale empirical analysis to investigate antecedents of EICCP in the third essay. Specifically, I examine the regulatory risks associated with climate change and firms’ supply network complexity as critical and interrelated factors for firms’ EICCP. The latter two essays contribute to the growing literature on climate change and firm responses. Overall, my thesis responds to the call for policy-related studies in the supply chain field and provides insights for policy decision-makers.
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